Public Redevelopment Final Candidate Sites Selection D-2... Aging Villas 'Buzzing'

Priority Review for 13 Existing Maintenance Zones
New Zones Scheduled for Review in March
Investment Demand Inflows Targeting Redevelopment Benefits
Also Pointed Out as a Catalyst for House Price Increase

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The final selection of public redevelopment candidate sites is just two days away. The Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport plan to prioritize the review of 13 existing redevelopment zones with established maintenance plans to accelerate urban housing supply. Due to the anticipation of public redevelopment, investment demand is flowing in, causing the value of aging row houses and multi-family homes across Seoul to soar.

According to Seoul City on the 12th, the city and the Ministry of Land, Infrastructure and Transport have confirmed that the Public Redevelopment Pilot Project Candidate Site Selection Committee will be held on the 14th. The review targets for this committee are 13 existing redevelopment zones: Heukseok 2, Yangpyeong 13 and 14, Yongdu 1-6, Gangbuk 2 and 5, Dapsimni 17, Bongcheon 13, Sinseol 1, Sewoon 3-10, 308, 5-4, and Sinmunno 2-12. The selection committee will consist of about 15 members, including representatives from Seoul City, the Ministry of Land, Infrastructure and Transport, Seoul city council members, and experts from various fields such as urban planning, architecture, redevelopment projects, and law. To ensure transparency and objectivity in the selection process, each committee member will submit a recommendation letter explaining why a particular zone is suitable as a candidate site.

Public redevelopment is a maintenance project in which public entities such as the Korea Land and Housing Corporation (LH) and the Seoul Housing and Communities Corporation (SH Corporation) participate as joint implementers to increase urban housing supply. It offers exceptional incentives such as increased floor area ratio, simplified approval procedures, and exemption from the price ceiling system, attracting significant interest from zones where redevelopment projects have stalled due to lack of profitability.

An official from the Seoul City Housing Maintenance Division stated, "We plan to select candidate sites by comprehensively considering the urgency of maintenance, the public nature of the project, and the balance among autonomous districts." However, they also explained that the selection of candidate sites might be delayed depending on the committee's results. The selection of candidate sites for about 50 new zones (including planned and released maintenance zones) other than the existing zones is scheduled to take place at the end of March.

The goal for urban housing supply through public redevelopment is a total of 40,000 households. The government announced on May 6 last year the ‘Plan to Strengthen the Housing Supply Base in the Metropolitan Area,’ pledging to supply 20,000 households through public redevelopment, and later expanded the target to 40,000 households in the August 4th measures. Accordingly, Seoul City plans to complete the approval procedures for this volume by 2028.

Furthermore, with President Moon Jae-in apologizing in his New Year's address for housing issues by expressing "a remorseful heart" and stating, "We will focus especially on expanding supply and swiftly prepare various housing supply measures that can show quick effects," the possibility of expanding supply through public redevelopment is also anticipated.

However, there are also criticisms that public redevelopment is acting as a catalyst for another rise in housing prices. Investment demand aiming to benefit from redevelopment is indiscriminately flowing in, causing the prices of aging row houses and multi-family homes to rise even before the final candidate sites are confirmed. For example, a 22㎡ (exclusive area) multi-family home in Seongbuk 1 district, Seongbuk-gu, was sold for 430 million KRW in October last year, which is 50 million KRW higher than the actual transaction price in February of the same year. In Wonhyo-ro 1-ga, Yongsan-gu, the asking price for multi-family homes that traded in the 500 million KRW range a year ago has risen to around 800 million KRW. A representative from nearby A Real Estate Agency said, "Due to the recent apartment rental shortage, villa rental and sale prices have also risen, and with rumors that this area is likely to be selected for public redevelopment, inquiries and prices have increased."

A consulting industry official for maintenance projects said, "Public redevelopment can be an opportunity for zones with low profitability, but for new zones, it is necessary to carefully check whether they meet conditions such as aging and whether residents can receive occupancy rights."

This content was produced with the assistance of AI translation services.